Kraft-Heinz had $26.2B in sales in 2017, of which $9B was profit. They had 39K employees. If we naively assume that all 39K are minimum wage employees working full time all year, that comes out to a payroll cost of $1.2B. that's approximately 5% of their total revenues, meaning if it had to be paid for exclusively through new sales, the price increase per item sold would likely be 5%. In reality, it would be much lower than that because Kraft-Heinz is already paying a large portion of that $1.2B in its existing payroll costs and not all of its 39K employees are minimum wage workers. So the argument that food is expensive because of employee wages is provably false.
False because you take a "real world" example and twist it to fit your beliefs ?
A good amount of the cost of what is produced comes from work. Hence the cost of inputs is also dependent on the cost of work (does the company you refer to contracts with suppliers ?)
If you force work to be paid 1 million USD / month, what happens ?
I didn't twist it to fit my beliefs: i presented a scenario that is actually more expensive than what it would be in reality and showed how even that would not be a substantial increase in cost, even if it was paid for exclusively by increasing the price of products sold.
A $1M/mo additional increase in supply costs would be less than .1% of their revenue. It just manages to be .1% at $10M/mo. Given that the $1.2B/yr payroll cost I cited above is actually only 4.5% of Kraft's yearly revenue (I rounded up to 5% for simplicity), the additional supply chain cost you present would actually be covered by the 5% price increase I initially mentioned. It would in fact be covered by that 5% even at $10M/mo.
But this company buys products from others company so ultimately an increase in wages will feed through almost all inputs, hence output. Your calculation is wrong
Yes, you already said that. You asked what would happen if their supply chain raised payroll (and therefore prices) by $1M/mo. And I answered that question.
No my question is setting the minimum wage to 1 million USD per month (per employee obviously). Of course 1 million USD / month more in cost is nothing
Obviously that wage isn't sustainable. The good news is that the majority of people discussing wage increases are making good-faith arguments about sustainable increases, and are not asking for a (ridiculous) $12M/yr minimum wage.
I'm not sure I understand what point you're trying to make by presenting a hypothetical wage that's 5 orders of magnitude larger than the situation being discussed.
That you cannot create money out of thin air, that you are only trying to force increasing the relative value of labor vs. capital / land / moral hazard etc.
If your increase in minimum wage follows productivity then what's the point ? It's like voting for no child labour laws after most of the children are not working anymore
